I’m a very big fan of buy and hold investing and believe it is the best way for investors to grow their wealth.

To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

This time around I have picked out the three ASX shares that are listed below:

ASX Ltd (ASX: ASX)

The operator of the Australian stock exchange has been a great place to invest your money over the last decade. Thanks to its near monopoly on share trading in Australia, ASX Ltd has been able to grow its earnings and dividends at a consistently solid rate over the period. This has ultimately led to the ASX Ltd share price generating an average total return of 13.8% per annum since 2010. This would have turned a $20,000 investment in its shares into almost $73,000.

Nanosonics Ltd (ASX: NAN)

If you invested $20,000 into the shares of this infection prevention company in 2010, you would be sitting on a small fortune today. Thanks to the success of Nanosonics’ trophon EPR disinfection system for ultrasound probes, the company’s sales have been growing at a rapid rate over the last decade. This has led to Nanosonics shares generating an average total return of 27.2% per annum. This means that investment would now be worth an incredible $220,000.

Sonic Healthcare Limited (ASX: SHL)

A winning combination of organic and acquisitive growth led to this international medical diagnostics company growing its earnings and dividends at a solid rate over the last 10 years. This has resulted in the Sonic Healthcare share price smashing the market over the period. Its shares have generated an average total return of 14.3% per annum since 2010. This would have turned $20,000 into over $76,000 today.

More reading

• 3 quality ASX shares to add to your portfolio
• 3 underloved ASX healthcare shares with strong comeback potential
• Nanosonics and 2 other ASX healthcare shares to buy
• Why PolyNovo and these ASX healthcare shares could be long term market beaters
• 5 things to watch on the ASX 200 on Monday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How to turn $20,000 into over $200,000 in 10 year with ASX shares appeared first on Motley Fool Australia.

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After a solid start to the week, the S&P/ASX 200 Index (ASX: XJO) gave back all its gains and more on Friday. This led to the index recording a disappointing 1.6% weekly decline to finish at 5,927.8 points.

Four shares that didn’t let that stop them from recording strong gains are listed below. Here’s why they were the best performers on the ASX 200 last week:

The AP Eagers Ltd (ASX: APE) share price was the best performer on the ASX 200 last week with a 12.2% gain. Investors were buying the auto retailer’s shares after it released a trading update. Although it confirmed that trading conditions are difficult, it remains confident it will report an underlying profit from continuing operations of $40.3 million during the first half. This represents a 23.6% decline from the prior corresponding period. In addition to this, AP Eagers revealed that it had achieved permanent cost reductions of $78 million per year in the previous three months.

The Credit Corp Group Limited (ASX: CCP) share price wasn’t far behind with an 11.3% gain. The catalyst for this was the release of its full year results. The debt collector delivered a net profit after tax of $15.5 million. This was a sharp year on year decline and driven by impairments and additional provisioning due to the pandemic. However, excluding one-off adjustments, net profit after tax would have been up 13% to $79.6 million.

The GWA Group Ltd (ASX: GWA) share price was on form last week and recorded a 10.9% gain. This appears to have been driven by a broker note out of Credit Suisse. It upgraded the home products company’s shares to an outperform rating with a $3.05 price target. The broker made the move after online searches appeared to indicate that spending on bathroom renovations was on the rise. Combined with its cheap valuation, the broker thinks GWA is a buy.

The Super Retail Group Ltd (ASX: SUL) share price stormed 10.7% higher last week thanks to the release of a stronger than expected full year update. That update revealed that its sales bounced back very strongly in May and June. So much so, Super Retail actually delivered solid full year sales growth of 4.2% in FY 2020. Management also advised that it expects to deliver growth in its pro forma EBITDA. This is expected in the range of $327 million and $328 million, up from $315 million in FY 2019. Though, this excludes one-offs such as its employee underpayment remediation costs.

More reading

• These were the worst performing shares on the ASX 200 last week
• ASX 200 drops 2%, ASX banks fall, Super Retail jumps
• Why I’m worried about the US markets right now
• Latest ASX stocks upgraded by top brokers to “buy” today
• US tech shares deliver massive results – what does it mean for ASX tech shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post These were the best performing shares on the ASX 200 last week appeared first on Motley Fool Australia.

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If you’re looking to add some dividend shares to your portfolio next week, then I think the three listed below could be top options.

Here’s why I think these dividend shares are in the buy zone:

Fortescue Metals Group Limited (ASX: FMG)

The first ASX dividend share to consider buying is Fortescue. I think it could be a good option due to the strong free cash flow it is generating thanks to favourable iron ore prices and its low costs. In respect to the latter, in FY 2021 Fortescue’s guidance is for cash costs of US$13.00 to US$13.50 per wet metric tonne. This is materially lower than the price it is commanding for its iron ore at present. Another positive is that the company has a strong balance sheet, which should mean it is well-positioned to return the majority of its free cash flow to shareholders. Based on the current Fortescue share price, I estimate that its shares offer a fully franked FY 2021 dividend yield of at least 5%.

Rural Funds Group (ASX: RFF)

Another top ASX dividend share to buy is Rural Funds. The agriculture-focused property group appears well-positioned to grow its distribution at a consistent and solid rate over the long term. This is thanks to its high quality assets and their long tenancy agreements which have periodic increases built into them. In FY 2021 Rural Funds expects to pay a 11.28 cents per share distribution. Based on the latest Rural Funds share price, this equates to a 5.5% yield.

Telstra Corporation Ltd (ASX: TLS)

A final ASX dividend share I would consider buying is Telstra. I like the telco giant due to its strong business model, defensive qualities, and generous dividend yield. Another positive is the progress it is making with its T22 strategy. This includes material cost cutting and the simplification of its business. Combined with the easing NBN headwind, I believe Telstra’s future is looking increasingly positive. Based on the current Telstra share price, I estimate that Telstra’s shares offer a fully franked 4.8% dividend yield.

More reading

• 3 ASX dividend shares for dependable income
• I would buy ResMed and these ASX blue chip shares in August
• Buy these ASX ETFs for dividends in August
• Telstra and 2 more ASX shares I’d like to buy with $5,000
• Reliable ASX dividend shares still exist

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 of the best ASX dividend shares to buy right now appeared first on Motley Fool Australia.

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Today’s volatile stock market may cause many investors to avoid buying cheap stocks. They may determine that other assets with lower risks are a better option than companies that face challenging operating conditions in many cases.

However, the track record of the stock market shows that buying undervalued shares can lead to high returns over the long run. As such, now could be the right time to purchase high-quality businesses that trade at cheap prices.

Here’s how you could achieve that goal, and in doing so improve your financial prospects in the coming years.

Identifying sectors with cheap stocks

Perhaps the first step to take when seeking to find cheap stocks is to identify which sectors currently offer good value for money. Although the stock market has rebounded since the market crash, some sectors continue to contain companies with extremely low valuations. In many cases, undervalued sectors have uncertain near-term outlooks that have caused investors to demand wide margins of safety.

Clearly, some sectors may be cheap for good reason. They may be unable to fully recover from the challenges they face, and the business models of their members may prove obsolete due to changing consumer trends. However, by identifying sectors with near-term challenges and long-term recovery potential, you may be able to unearth a large number of good value stocks that can be added to your portfolio.

Annual reports

Just as some sectors may be undervalued for good reason, some cheap stocks may have very undesirable future prospects. Therefore, accessing annual reports may help you to understand which companies offer recovery potential, and which businesses may fail to experience a sustained rally in the coming years.

Annual reports are free to access for any investor, and contain a vast amount of information about a business. Together with recent trading updates, they allow an investor to paint an accurate picture of the strengths and weaknesses of a business that can be used to value it. A buying opportunity may exist if its stock price is currently significantly below its intrinsic value.

Relative pricing

At the present time, it is difficult to ascertain whether cheap stocks offer good value for money on a standalone basis. Their outlooks are opaque due to a challenging economic future.

Therefore, it could be prudent to identify businesses that trade on lower valuations than their sector peers. Although no two businesses are ever identical, companies operating in the same sector and geographies are likely to face similar risks and growth opportunities. By comparing their prices, it may be possible to determine whether they offer investment appeal for the long term.

Clearly, not all cheap stocks will deliver a successful recovery. However, the track record of the stock market suggests that buying a diverse range of businesses at low prices can lead to high returns in the long run.

More reading

• How to turn $20,000 into over $200,000 in 10 year with ASX shares
• These were the best performing shares on the ASX 200 last week
• 3 of the best ASX dividend shares to buy right now
• These were the worst performing shares on the ASX 200 last week
• 3 steps I’d take when investing in today’s volatile stock market to make a million

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How I’d find cheap stocks to buy in today’s market appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) was out of form last week and tumbled notably lower. The benchmark index ended the week 1.6% lower than where it started it at 5,927.8 points.

Four shares that fell more than most are listed below. Here’s why they were the worst performers on the ASX 200 index last week:

The IOOF Holdings Limited (ASX: IFL) share price was the worst performer on the ASX 200 last week with a 16% decline. Investors were selling the fund manager’s shares after the release of its fourth quarter update. During the quarter IOOF’s funds under management, advice and administration (FUMA) grew to $202.3 billion. This represents a quarterly increase of $6.7 billion or 3.4%. However, taking the shine off its FUMA update was its earnings commentary. IOOF advised that it expects to report an underlying net profit after tax of approximately $128 million to $130 million in FY 2020. This will be a ~35% decline from the $198 million it reported a year earlier.

The Sandfire Resources Ltd (ASX: SFR) share price wasn’t far behind with a 15.5% decline. Investors were selling the copper producer’s shares after a strong four quarter update was overshadowed by underwhelming guidance for FY 2021. A very positive fourth quarter led to full year copper production coming in at 72,238 tonnes and gold production totalling 42,263 ounces. This was achieved with C1 costs of 72 U.S. cents per pound. However, next year management expects copper production to reduce to between 67,000 and 70,000 tonnes and gold production to reduce to 36,000 to 40,000 ounces. But even worse, management is expecting its C1 costs to increase at least 25% to between 90 U.S. cents and 95 U.S. cents.

The IGO Ltd (ASX: IGO) share price was out of form and fell 15.1% over the period. The nickel producer’s shares came under significant pressure after its guidance for FY 2020 fell short of expectations. IGO expects its revenue to be $892.4 million and its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to come in at $459.6 million. The latter falls well short of the market’s expectations. Analysts at Macquarie, for example, were expecting EBITDA of $530 million.

The AMP Limited (ASX: AMP) share price crashed a disappointing 14.3% lower last week. This follows the release of an update on its expectations for the first half of FY 2020. The struggling financial services company revealed that it expects to report underlying profit from retained businesses in the range of $140 million to $150 million. This was below the market’s expectations and due to a range of negative factors including market volatility and a credit loss provision in AMP Bank.

More reading

• These were the best performing shares on the ASX 200 last week
• ASX 200 drops 2%, ASX banks fall, Super Retail jumps
• Why I’m worried about the US markets right now
• Latest ASX stocks upgraded by top brokers to “buy” today
• US tech shares deliver massive results – what does it mean for ASX tech shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post These were the worst performing shares on the ASX 200 last week appeared first on Motley Fool Australia.

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Investors have experienced a highly volatile stock market so far in 2020. Looking ahead, risks such as a continued rise in the number of coronavirus cases and geopolitical uncertainty in North America and Europe could contribute to continued heightened fears among investors.

Therefore, it may become increasingly important to build a diverse portfolio of high-quality businesses with sound finances when seeking to make a million. Furthermore, holding some cash may enable you to capitalise on temporary declines in stock prices that may occur over the coming months.

Diversification in a volatile stock market

Diversification is always a key part of investing, but may become even more crucial in a volatile stock market. Share prices could come under significant pressure across many sectors over the coming months. Therefore, if you own a wide range of businesses, the impact on your portfolio’s performance from disappointing returns among a small number of holdings is unlikely to be extreme.

With the cost of sharedealing having fallen over recent years, it is now possible for the vast majority of investors to buy a wide range of shares in order to diversify. Diversification may also boost your returns through allowing you to take advantage of the growth opportunities in a wider range of sectors at a time when it is difficult to predict which industries will prosper in a post-coronavirus world.

Financially-sound businesses

A volatile stock market may also mean that investing in financially-sound businesses becomes more important. Over the past decade, companies with weak balance sheets and questionable business models have often survived due to strong economic growth being present.

However, with the economy’s outlook being weak and consumer sentiment being at relatively low levels in many countries, only the strongest companies may prosper over the coming years. As such, focusing your capital on those businesses that have modest debt levels, strong cash flow and wide economic moats could prove to be profitable. They may not be among the cheapest shares around, but their higher quality versus sector peers could make them more attractive on a risk/reward basis.

Cash holdings

Holding some cash in a volatile stock market could be a sound move. Of course, low interest rates mean that cash is unlikely to offer a high return over the long run. It could even reduce your spending power over the coming years if inflation moves higher. Therefore, relying on it to boost your chances of making a million is not a sound idea.

However, an uncertain economic outlook means that a second market crash cannot be ruled out. This may present more attractive buying opportunities over the coming months that can be capitalised upon by investors who hold cash today. Buying high-quality stocks at even lower prices may increase your prospects of obtaining a seven-figure portfolio.

More reading

• Worried about a second stock market crash? I’d start investing like Warren Buffett
• Forget gold and Bitcoin. I’d buy cheap stocks after the market crash to make a million
• Stock market crash: why I’d grab this rare chance to buy cheap shares
• 3 ASX dividend shares for dependable income
• ASX 200 drops 2%, ASX banks fall, Super Retail jumps

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 steps I’d take when investing in today’s volatile stock market to make a million appeared first on Motley Fool Australia.

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The risk of a second stock market crash may be causing some investors to sit on the sidelines and await greater clarity in the prospects for the global economy. However, it is during the riskiest periods for the stock market that the best investing opportunities can come along.

As such, using the value investing strategy of Warren Buffett could be a profitable move. It may enable you to invest today and generate high returns in the coming years.

A second market crash

The previous performance of the stock market suggests that a second market crash would not be a major surprise. There are still many risks facing investors that have the potential to cause a fall in investor confidence, as well as to weaken the operating environments across a wide range of industries.

Risks include a continued rise in the number of coronavirus cases, possible difficulties in the upcoming United States election, and a continued stalemate in Brexit talks. Any of those risks, as well as a great many others, could cause a fall in stock prices that undoes all of the gains made over recent months during the market rebound.

Value investing in an uncertain market

The prospect of a second stock market crash may naturally cause some investors to become fearful. They may worry about the potential for paper losses over the near term that damage their wealth, albeit on a temporary basis.

Other investors, such as Warren Buffett, view falls in stock prices as opportunities to buy cheap stocks as opposed to threats to their long-term wealth. Through having a value investing focus, you can buy the most attractive stocks available when they trade at wide discounts to their intrinsic value.

The opportunities to do so often coincide with the riskiest periods from an economic perspective. However, with no bear market or global recession having ever lasted in perpetuity, long-term investors who buy a diverse range of undervalued shares are relatively likely to enjoy impressive returns from their recovery.

Starting to invest in undervalued shares today

While the potential for another market crash may dissuade some investors from buying shares today, many stocks appear to offer wide margins of safety. This could mean that the stock market has factored in many of the risks they face, and that they offer attractive risk/reward opportunities.

Therefore, now could be the right time to start building an equity portfolio. Through focusing your capital on high-quality businesses with strong balance sheets and wide economic moats, just as Warren Buffett has done throughout his career, you could enjoy high returns in the long run. Doing so may not make you a billionaire, but it could enhance your financial future and help you to enjoy a greater degree of financial freedom in the coming years.

More reading

• 3 steps I’d take when investing in today’s volatile stock market to make a million
• Forget gold and Bitcoin. I’d buy cheap stocks after the market crash to make a million
• Stock market crash: why I’d grab this rare chance to buy cheap shares
• 3 ASX dividend shares for dependable income
• ASX 200 drops 2%, ASX banks fall, Super Retail jumps

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Worried about a second stock market crash? I’d start investing like Warren Buffett appeared first on Motley Fool Australia.

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